India, which is assisting Sri Lanka in reconstruction of its war-ravaged northern region, on Friday extended more than $416 million as Line of Credit for building three railway projects in this country.

External Affairs Minister S M Krishna, who is on a four-day visit to Sri Lanka, witnessed the signing of the credit agreement for $416.39 million along with his counterpart G.L. Peiris in the presence of President Mahinda Rajapaksa.

The Line of Credit is being extended for three projects ? Omanthai-Pallai, Madu Road-Talaimannar and Medawachchiya-Madu Road.

The seventh Joint Commission meeting between India and Sri Lanka co-chaired by Mr. Krishna and Mr. Peiris expressed satisfaction that contracts for the three projects had been signed, an official statement said.

Mr. Krishna and Mr. Peiris welcomed the fact that the work on the Northern Railway Line was commencing from Saturday.

The Joint Commission reviewed the utilisation of the existing Lines of Credit (LOC) offered by the Government of India to Sri Lanka, especially those pertaining to the rehabilitation of the Southern Railway corridor costing about $167.4 million.

The two sides also reviewed the status of the LOC for Northern Railway Reconstruction and the LOC of $200 million offered by India for the construction of a jetty at Sampur and a transmission line from Sampur to Habarana.

The Commission also reviewed the financial support for equity contribution of the Ceylon Electricity Board (CEB) for setting up a joint venture with NTPC to develop a coal power plant at Sampur, a town in Eastern Trincomalee district.

The Joint Commission studied the progress on the Northern Railway projects being implemented by IRCON, a leading Indian public sector turnkey construction company.

It emphasised the need for substantially enhancing the range and depth of the Indo-Sri Lanka bilateral ties through greater economic integration to achieve the shared goals of poverty alleviation, wealth creation and bringing about progress and prosperity for the people of the two countries.

The meeting noted with satisfaction that bilateral trade, which witnessed a downturn in 2009 as a result of the global economic slowdown, has shown a healthy recovery in 2010, the statement said.

The two sides reviewed investment proposals being considered by companies in both countries and expressed satisfaction at the growing interest of Indian and Sri Lankan firms to invest further in each other?s markets.

In this context, the two sides agreed to cooperate closely to nurture a favourable environment to forge closer economic and trade linkages.

Recognising the considerable benefits from greater economic cooperation between the two countries, the Joint Commission noted the significant progress achieved under the India-Sri Lanka Free Trade Agreement (ISLFTA).

It reaffirmed the understanding contained in the bilateral Joint Declaration of June 9, 2010 that it would be timely to build on this achievement through a more comprehensive framework of economic cooperation best suited to the two countries.

In this context, it expressed satisfaction at the recent discussions between the officials of the Departments of Commerce of the two countries.

The Joint Commission also took note of the stakeholders? consultations carried out by the Sri Lankan side on the draft framework text of the Comprehensive Economic Partnership Agreement (CEPA).

On the Constitution of the India-Sri Lanka bilateral CEOs Forum, the Commission hoped it would help in building economic ties.

It also hoped that the Forum would prove to be a valuable mechanism in bringing together the public and private sectors in a dialogue.

This, it said, would generate ideas to deepen and broaden the bilateral economic relationship in all its aspects and help chart the future course of business and trade interaction between the two countries, according to the statement.

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